Sba Tries Paperwork Reduction

Small-business owners could be just one page away from an SBA-guaranteed loan.

The Small Business Administration’s lowdocumentation, or LOWDOC, program eliminates the pages of documentation previously required for guaranteed loans, boiling the application down to a single page for loans under $50,000.

The change addresses a frequent complaint of small-business loan applicants.

“(SBA) is trying to promote smaller loans,” said Robert Wiebe, district director of SBA’s Spokane office. “Generally, that should help out women in business, minorities, and real small businesses that might be light in equity.”

LOWDOC applies to loans under $100,000 made by banks and guaranteed for up to 90 percent by the SBA. Loans between $50,000 and $100,000 require an applicant’s income tax returns for the previous three years and personal financial statements from coowners and other guarantors in addition to the one-page application.

The program does not affect a bank’s paperwork requirements. But less paperwork on the SBA side makes applying easier for small-business owners and less timeconsuming for banks, Wiebe said. The time savings can increase a bank’s willingness to handle a small loan.

As it was, “it doesn’t take much longer to do a million dollar loan than a $10,000 loan,” Wiebe said.

LOWDOC grew out of town hall meetings conducted by SBA Administrator Erskine Bowles, where small business owners complained about heavy loan paperwork, Wiebe said. SBA tested LOWDOC in Texas and tripled that district’s loan volume.

In the Spokane district, which includes North Idaho and Eastern Washington, loan volume could double, Wiebe said.

Any small business eligible for the SBA’s regular loan program can apply under LOWDOC if annual sales are $5 million or less and the business employs 100 or fewer workers.